Professional Documents
Culture Documents
"BUY"
The company was the first to get 5 star rating for energy efficiency for its products from BEE. In addition to submersible pumps, company also producing Vertical Multistage Centrifugal pumps, Pressure booster pumps, Open well pumps, End suction pumps etc. Recently company introduced pumps working with solar power. In next three years company incline to achieve sale revenue of Rs. 600 crore with the net margin of 9-10%. Company is planning to increase the Branch Network to 30 and Dealer network to 3 fold in coming few year. Further, Company have plans to register our presence in all BRICS, G20 and European Union and in other growing countries in coming years. On valuation front shakti pump is available at a single digit PE and EV/EBIDTA of 5.6x/4.1x and 4.7x/3.8x of its FY14E/15E estimates. In a volatile market, a company available at single digit valuations certainly looks up for grabs .................................................................... ( Page : 2-4)
"BUY"
On performance front, it continues to be bullish on the rebid market and bullish on short-term to medium term, momentum on deals pipeline also looking robust. Considering the increasing discretionary spends across the geographies like US and Europe, we expect healthy earnings performance ahead. ...................................................................... ( Page :5-6 )
BANKBARODA
"BUY"
On fundamental wise, we are not very impressed with bank but in recent market rally, PSB as well as private banks participated more than any sector likely due to outcome of exit poll for the coming election. We believe bank would rally more because of trading at lower side despite of index is running at all time high. But with this fundamental Bank of Baroda would trade in range of Rs.635 to Rs.700 depending upon sentiment as per our view. .................................................................... ( Page : 7-9)
"HOLD"
The Prestige Estate has moved up form starting of CY12, peaked in May13, then went down gradulally. The stories behind the current price diving are the concern of price war, staggered economics, and non softening of interest rates. However given the limited upside in counter in near term, we revise our rating on PEPL to Hold with a revised price target of Rs. 190. Regarding the stock's future course, our Hold rating indicates that we do not recommend additional investment in this stock despite its gains in the current period. ..................................................................................... ( Page : 10-11)
"BUY"
Dabur expects volume growth at a range of 8-12% for FY15E led by innovation and effective distribution initiatives in chemist channels. If discretionary demand from urban area improves, then volume growth in double digit would not be a surprise for street. Considering its expected expressive volume growth than other peers, aggression on new launches through innovation and aggressive distribution reach energize our positive stance on the stock. ............................................................. ( Page : 12-16)
"BUY"
We have initiated coverage with Buy rating on the stock with price target of Rs.220 which implies 1 times of FY14E book value. The company has delivered strong performance all around. During quarter, profitability was up by 60% on the back of healthy NII growth and improvement in operating leverage. Return ratio improved from 12% in FY12 to 18% in 3QFY14 which is expected to remain healthy on the back of improving operating leverage and aggressive branch expansion. ................................................... ( Page :17-23)
"NEUTRAL"
The Supreme Court upheld the constitutional validity of the November 11, 2011 Union government notifications, directing implementation of the recommendations of the Majithia Wage Boards for journalists and non-journalists of newspapers and news agencies. This judgment will work as a dampener for newspaper industry as well as DB CORP. Companys EBITDA margin will be effected very negatively not only in FY15E but also next few or more years. Therefore we downgrade DB CORP from `BUY to `NEUTRAL ........................................................................ ( Page : 24-25)
Narnolia Securities Ltd,
VCompany update
CMP Target Price Previous Target Price Upside Change from Previous
"Buy"
13th Mar' 14
Key Points : The company was the first to get 5 star rating for energy efficiency for its products from BEE. In addition to submersible pumps, company also producing Vertical Multistage Centrifugal pumps, Pressure booster pumps, Open well pumps, End suction pumps etc. Recently company introduced pumps working with solar power. In next three years company incline to achieve sale revenue of Rs. 600 crore with the net margin of 9-10%. Company is planning to increase the Branch Network to 30 and Dealer network to 3 fold in coming few year. Further, Company have plans to register our presence in all BRICS, G20 and European Union and in other growing countries in coming years. On valuation front shakti pump is available at a single digit PE and EV/EBIDTA of 5.6x/4.1x and 4.7x/3.8x of its FY14E/15E estimates. In a volatile market, a company available at single digit valuations certainly looks up for grabs. Pledging of shares by promoters is the only reason for some concern.But ,since its financial performance is improving quarter over quarter ,I dont expect much issues from this angle.Moreover pledge is not with any NBFC but with one of its bankers - Axis Bank.
Market Data
BSE Code NSE Symbol 52wk Range H/L Mkt Capital (Rs Crores) Average Daily Volume Nifty 531431 SHAKTIPUMP 38/88 116 13,645 6,518
Stock Performance-%
Absolute Rel. to Nifty 1M 1.5 (6.0) 1yr 44.2 31.5 YTD 72.4 57.8
1 yr Forward P/B
Company Profile Shakti is a manufacturer of stainless steel submersible pumps and motors ranging from 0.5 HP to 255 HP used in domestic, industrial, irrigation, and fire-fighting and located at Pithampur Madhya Pradesh. Company is the first five star rated pump manufacturer in India. In addition to submersible pumps ,company also producing Vertical Multistage Centrifugal pumps, Pressure booster pumps, Open well pumps, End suction pumps. The company is mainly focused on the export market and sup-plies its products to around 50 countries, such as US, UK, Turkey, Spain, Netherlands, Germany, France, Italy, Australia, Sri Lanka, etc. Nearly 58 per cent of its revenues are from exports. Of the balance 42 per cent of domestic revenues, 60 per cent come from supply to farmers, 20 per cent from domestic demand, 12 per cent from government institutions, and the balance 8 per cent from various industrial sectors. Industry Structure and Development The Indian pump industry is estimated to be Rs. 8000 crores in 2012-13. It is likely to grow at 8% and expected to reach Rs. 18000 crores by 2017-18. The market demand is driven by infrastructure based spending, urbanisation, growth in manufacturing activity, refurbishment & upgradation and overall increase in the population, insufficient rains and falling water tables have led to demand for improvement in hydraulics and pump efficiency. The rising cost of oil has positively influenced the demand for energy conservative pumps and pumps driven by renewable energy sources. There will be strong demand for pumps from developing countries like China and India due to industrialisation and investment in water and power segments. The developed nations propose to repair and upgrade their old water infrastructure. This will lead to good replacement demand for pumps in developed countries.
2011A 9M
2012A
2013A
2014E
2015E
2016E
65 81 147 1 52
87 83 170 2 47
109 82 191 2 43
128 80 208 2 76
154 80 234 2 76
189 80 269 2 76
HCLTECH
"Retain confidence"
Company update
CMP Target Price Previous Target Price Upside Change from Previous
"BUY"
12th Mar' 14
Buy
1454 1650 1560 13% 5.8%
Market Data
BSE Code NSE Symbol 52wk Range H/L Mkt Capital (Rs Crores) Average Daily Volume Nifty 532281 HCLTECH 1589/674 101643 1193062 6512
Stock Performance
Absolute Rel. to Nifty 1M 2.6 -5 1yr 85.5 75.9 YTD 135 122.9
Key takeaways from recent Investors Conference in Mumbai: Trump Card on rebid Market: HCL Tech Management expressed its optimistic tone for rebid opportunity with a deal of $45bn for negotiation in CY14E. Most of rebid would be come from Infrastructures and traditional IT segments. Across the tier-1 IT space, HCL Tech will be most beneficiary because of large exposures in Infrastructures space (36% of sales). Visionary approach to changing market dynamics: Forward looking statement from the desk of BoD (Given on annual report 12-13) reveals 5 major strategies to compete market dynamics and company is focused for the same. 5 major technological changes are expected to open up new opportunities for service providers: (1) Smart Computing: Consulting Solution for next-generation IT infrastructure to maximize workforce. The aggregation and management of Cloud services is executed through HCL's proprietary MyCloud platform. (2) Software-as-a-Service (SaaS): software that is owned, delivered and managed remotely by one or more providers. (3) Social Technologies: Technology that facilitates social interactions and is enabled by a communications capability, such as the Internet or mobile device. (4) Mobility: Mobility offering services from mobile application development and integration to mobile application services, to fully managed mobility including provisioning, hosting, and end-user support. (5) Analytics: End-to-end life cycle of services including management and hosting of customer assets, consolidation and migration services, virtualization and design and management of green data centers. Looking for strategic partnership with CSC: HCLTech is looking an opportunity of strategic partnership to transform clients services from legacy to cloud based technologies. As per IT based Gartner survey, clients are looking to retire, replace, and revise 80-85% of their applications over the next 2 years. The company expects to acquire and quantify of this opportunity with CSC (Nasdaq-listed IT services firm Computer Sciences Corporation, CSC). View and Valuation: HCL techs decent level of utilization, focused on cost control and utilization of new market opportunities through vendors consolidation would provide a new shape to the company in near future. On performance front, it continues to be bullish on the rebid market and bullish on short-term to medium term, momentum on deals pipeline also looking robust. Considering the increasing discretionary spends across the geographies like US and Europe, we expect healthy earnings performance ahead. At a CMP of Rs 1454, stock trades at 17.4x of FY14E earnings, We retain BUY on the stock and revised our target price from Rs 1560 to Rs1650. Financials 2QFY14 1QFY14 (QoQ)-% Revenue 8184 7961 2.8 EBITDA 2125 2093 1.5 PAT 1495 1416 5.6 EBITDA Margin 26.0% 26.3% (30bps) PAT Margin 18.3% 17.8% 50bps
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
(Source: Company/Eastwind)
HCLTECH
Healthy deal pipeline:
During the quarter, HCL Tech reported an addition of 15 transformational deals in the US and Europe for the December quarter. These wins have been in the momentum markets of manufacturing and Financial Services as well as the emerging momentum markets of life sciences & Healthcare and Public Services. Across the geographies, USA and Europe remain best to drive deal wins during the quarter because of healthy scenario of demand environment.
Financials;
Rs, Cr Net Sales-USD Net Sales Raw Materials Cost Employee Cost Operation and other expenses Total Expenses EBITDA Depreciation Other Income Extra Ordinery Items EBIT Interest Cost PBT Tax PAT Growth-% Sales-USD Sales EBITDA PAT Margin -% EBITDA EBIT PAT Expenses on Sales-% Employee Cost RM Cost Operation and other expenses Tax rate Valuation CMP No of Share NW EPS BVPS RoE-% Dividend Payout ratio P/BV P/E FY10 2704.6 12136.3 443.6 6253.7 3498.5 10195.7 1940.6 418.1 154.1 0.0 1522.5 204.1 1472.4 213.4 1259.0 24.1% 18.6% 5.9% -4.6% 16.0% 12.5% 10.4% 51.5% 3.7% 28.8% 14.5% 364.9 67.9 6288.8 18.5 92.6 20.0% 25.0% 3.9 19.7 FY11 3545.3 15730.3 522.1 8589.6 4163.2 13274.9 2455.4 459.7 299.7 0.0 1995.7 142.6 2152.8 488.5 1664.3 31.1% 29.6% 26.5% 32.2% 15.6% 12.7% 10.6% 54.6% 3.3% 26.5% 22.7% 493.5 68.9 7653.0 24.2 111.1 21.7% 31.5% 4.4 20.4 FY12 4151.5 20830.6 612.0 11104.6 5418.8 17135.3 3695.2 549.2 206.5 0.0 3146.0 142.6 3209.8 782.7 2427.1 17.1% 32.4% 50.5% 45.8% 17.7% 15.1% 11.7% 53.3% 2.9% 26.0% 24.4% 490.0 69.3 9837.9 35.0 141.9 24.7% 33.1% 3.5 14.0 FY13 4686.5 25581.1 959.3 12574.2 6386.4 19919.9 5661.2 636.8 306.6 44.5 5024.4 105.6 5269.9 1225.3 4044.6 12.9% 22.8% 53.2% 66.6% 22.1% 19.6% 15.8% 49.2% 3.8% 25.0% 23.3% 759.5 69.6 13164.0 58.1 189.1 30.7% 20.0% 4.0 13.1 FY14E 5464.6 32787.8 983.6 16066.0 7213.3 24262.9 8524.8 742.5 460.5 -491.8 7782.3 79.2 7671.8 1841.2 5830.5 16.6% 28.2% 50.6% 44.2% 26.0% 23.7% 17.8% 49.0% 3.0% 22.0% 24.0% 1454.0 69.6 17854.4 83.8 256.5 32.7% 19.6% 5.7 17.4 FY15E 6484.1 39229.0 1176.9 19418.3 8826.5 29421.7 9807.2 881.0 590.2 78.5 8926.2 59.4 9535.5 2336.2 7199.3 18.7% 19.6% 15.0% 23.5% 25.0% 22.8% 18.4% 49.5% 3.0% 22.5% 24.5% 1454.0 69.6 23913.5 103.4 343.5 30.1% 15.8% 4.2 14.1
(Source: Company/Eastwind)
BANKBARODA
ANNUAL REPORT UPDATE
"ADD"
11h March. 2014
Result update CMP Target Price Previous Target Price Upside Change from Previous Market Data BSE Code NSE Symbol
52wk Range H/L Mkt Capital (Rs Cr) Average Daily Volume Nifty
At the current price of Rs.651/share stock is trading at 0.77 times of FY14E book value which is now premium over its peer group. We value bank at the range of Rs.634 to Rs.790 implying valuation multiple of 0.75 to 0.9 times of one year forward book. But upper side of book value multiple would be possible only if the improvement of asset quality along with improving sign of fundamentals. But in its quarterly result, banks performance was muted all around except healthy loan and deposits growth. CASA growth was remained muted in compare to SBI and PNB. So cost of deposits is unlikely to soften in near term while asset quality was deteriorated higher in percentage as compare to PNB and SBI. In the following section we will discuss the fundamental improvement of bank during quarter. NII growth on the back of loan growth and margin expansion Banks NII grew by 7.6% YoY largely due to healthy loan growth and sequentially margin improvement of 5 bps. Margin improve came from domestic push from 2.85% to 2.95 while international NIM remained stable at 1.18%. Cost of fund declined by
Share Holding Pattern-% Current 4QFY13 3QFY1 3 Promoters 55.4 55.4 55.4 FII 15.5 15.5 15.3 DII 19.6 19.6 19.0 Others 9.5 9.5 10.3 BANKBARODA Vs Nifty
14 bps quarterly due to lower borrowings as a percentage of percentage of NDTL. Advance growth led by SME and retail Advances grew by 18% YoY largely came from SME and retail sector which grew by 39% and 21% YoY respectively. Bank continued to be cautions while expanding its exposure towards large corporate owing to economy recession. Deposits grew by 21.5% YoY, added by foreign currency non- resident deposits but CASA franchise remained flat at 26%. So in CASA front we are not impressed and going forward cost of fund is unlike to be soften in our view. Profit inflated due to lower provisions led by reversal of investment depreciation Provisions were lower by 11.5% YoY on account of reversal of investment depreciation to the tune of Rs.120 cr offset additional provision towards nonperforming assets. But banks stress loan (slippage + Restructure) loans were Rs.1275 cr which was almost in previous quarter. Lower provisions made 17% up PBT but at operating profit level, it was down by 2.6% YoY. Tax rate was higher due to creation of DTL as per advice by RBI. View & Valuation On fundamental wise, we are not very impressed with bank but in recent market rally, PSB as well as private banks participated more than any sector likely due to
outcome of exit poll for the coming election. We believe bank would rally more because of trading at lower side despite of index is running at all time high. But with this fundamental Bank of Baroda would trade in range of Rs.625 to Rs.700 depending upon sentiment as per our view.
Financials
NII Total Income PPP Net Profit EPS 2011 8802 11611 6982 4242 108.3 2012 10317 13739 8581 5007 121.8
Rs, Cr 2013 2014E 2015E 11315 12218 14122 14946 16400 18304 8999 9206 10067 4481 4444 4819 106.4 105.5 114.4 (Source: Company/Eastwind)
7
BANKBARODA
Quarterly Result (Rs Cr) Interest/discount on advances / bills Income on investments Interest on balances with Reserve Bank of India Others Total Interest Income Others Income Total Income Interest Expended NII Other Income Total Income Employee Other Expenses Operating Expenses PPP( Rs Cr) Provisions Exceptional Items PBT Tax Net Profit 3QFY14 7061 2175 245 209 9691 932 10623 6634 3057 932 3989 1056 736 1792 2197 762 16 1436 372 1048 2QFY14 6832 2220 281 140 9473 974 10447 6579 2895 974 3869 1030 714 1744 2125 861 16 1264 80 1168 3QFY13 % YoY Gr 6485 8.9 1898 14.6 403 -39.2 58 258.2 8845 9.6 841 10.9 9686 9.7 6004 10.5 2841 7.6 841 10.9 3681 8.4 798 32.3 627 17.3 1426 25.7 2256 -2.6 1029 -26.0 12 25.0 1227 17.0 203 83.7 1012 3.6 % QoQ Gr 3QFY14E 3.3 7173 -2.0 2350 -12.8 397 50.1 173 2.3 10092 -4.3 1102 1.7 11194 0.8 6792 5.6 3300 -4.3 1102 3.1 4402 2.5 1189 3.1 792 2.7 1981 3.4 2421 -11.5 897 0.0 0 13.6 1524 364.7 457 -10.3 1067
Balance Sheet Date( Rs Cr) Equity Capital Reserve & Surplus Net Worth Total Deposits Borrowings Other liabilities and provisions Total Liability Cash in hand Cash and balances with RBI Total Investment Advances Fixed Assets Others Assets Total Assets
423 35232 35654 503772 29304 18638 587368 16742 87599 115210 352446 2562 12809 587368
423 35127 35549 484931 28558 13995 563033 15681 79980 111840 339855 2498 13179 563033
412 30966 31379 414733 27899 14552 488563 17147 58295 101848 299318 2399 9557 488563
2.5 13.8 13.6 21.5 5.0 28.1 20.2 -2.4 50.3 13.1 17.7 6.8 34.0 20.2
0.0 0.3 0.3 3.9 2.6 33.2 4.3 6.8 9.5 3.0 3.7 2.6 -2.8 4.3
Asset Quality GNPA( Rs Cr) NPA(Rs Cr) % GNPA % NPA % PCR (without technical writeoff)
Source: Eastwind/Company
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
BANKBARODA
Income Statement
Interest Income Interest Expense NII Change (%) Non Interest Income Total Income Change (%) Operating Expenses Pre Provision Profits Change (%) Provisions PBT PAT Change (%)
2011
21886 13084 8802 48.2 2809 11611 32.8 4630 6982 41.5 1331 5650 4242 38.7
2012
29674 19357 10317 17.2 3422 13739 18.3 5159 8581 22.9 2555 6026 5007 18.0
2013
35197 23881 11315 9.7 3631 14946 8.8 5947 8999 4.9 4168 4831 4481 -10.5
2014E
39065 26847 12218 8.0 4182 16400 9.7 7194 9206 2.3 3559 5647 4444 -0.8
2015E
45206 31084 14122 15.6 4182 18304 11.6 8237 10067 9.4 4043 6024 4819 8.4
Balance Sheet
Deposits( Rs Cr) Change (%) of which CASA Dep Change (%) Borrowings( Rs Cr) Investments( Rs Cr) Loans( Rs Cr) Change (%) 305439 27 87589 23 22308 71261 228676 31 384871 26 103524 18 23573 83209 287377 26 473883 23 119981 16 26579 121394 328186 14 521272 10 135531 13 33273 122000 367568 12 573399 10 149084 10 36600 134200 404325 10
Ratio
Avg. Yield on loans Avg. Yield on Investments Avg. Cost of Deposit Avg. Cost of Borrowings 8.0 7.0 4.3 5.5 8.7 7.8 5.1 6.7 8.4 6.4 5.2 5.4 8.6 7.3 5.2 5.5 9.3 8 5.4 5.5
Source: Eastwind/Company
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
VResult update
CMP Target Price Previous Target Price Upside Change from Previous
"Hold"
10th Mar' 14
Key Points The Prestige Estate has moved up form starting of CY12, peaked in May13, then went down gradulally. The stories behind the current price diving are the concern of price war, staggered economics, and non softening of interest rates. The heat wave in economy have affected complete sector, this hurt the real estate companies' revenue and the revival which were expected by us in previous year cannot be seen in the manner in which we expect. Earlier in our 3QFY14 result update we had given a buy rating on stock when the price was Rs. 145, with the next 5-6 month price target of Rs. 165. However seeing the current rally in stock post 3QFY14 result and on back of guidance for FY14 at Rs. 4300 crore sales booking as the management commentary on the result call regarding launches in Q3FY14 as well as through the year remained extremely positive. However given the limited upside in counter in near term, we revise our rating on PEPL to Hold with a revised price target of Rs. 190. Regarding the stock's future course, our Hold rating indicates that we do not recommend additional investment in this stock despite its gains in the current period. Result Highlights 3QFY14 Prestige Estates Projects said it sold 1,204 residential units and 0.026 million square feet (Mnsft) of commercial space, aggregating to 2.075 Mnsft, amounting to Rs 1262 crore of sales in Q3 December 2013. Of the above, Prestige share is 904 units -1.55 Mnsft amounting to Rs 940.20 crore of sales, up by 24.69% from that of Q3 December 2012.In Q3 December 2012, the company had sold 682 units aggregating 1.44 Mnsft of residential and commercial space, amounting to Rs 754 crore of sales - Prestige share. (Overall sales of 1.69 Mnsft of area amounting to Rs 873.90 crore). Collections rose 16.69% to Rs 592.30 crore in Q3 December 2013 over Q3 December 2012 - Prestige share. (Overall collections for the Q3 December 2013 - Rs 713.30 crore). In Q3 December 2013, the company launched the first phase of its largest residential project- Prestige Lakeside Habitat in Bangalore aggregating to 2.79 million square feet of total developable area. The project is spread across 102 acres in area and consists of apartments and villas with total developable area of 8.40 Mnsft. Management Guidence FY14E Company will exceed its presales guidance. Company has already done sales to the extent of Rs 1,200 crore plus and now it is just a question of production and these numbers getting recognised because company need to touch the trigger of 30 percent to recognise these numbers. During the year, company has made Rs 3,700 crore and guidance was Rs 4,300 crore. On his outlook for the company's business, Prestige Estates Projects, says there is no slowdown in the Bangalore market and aims to concentrate on the phase 2 and 3 of its Lakeside Habitat project newt quarter Valuation: At the current CMP of Rs. 165, the stock is trading at a PE of 16.0x FY14E & 13.6x FY15E . The company can post EPS of Rs. 10.3 & Rs. 12.1 in FY14E & FY15E and RoE of 11.3% & 12.0%.
Market Data
BSE Code NSE Symbol 52wk Range H/L Mkt Capital (Rs Crores) Average Daily Volume Nifty 533274 PRESTIGE 102/195 5,717 161,912 6,401
Stock Performance-%
Absolute Rel. to Nifty 1M 15.6 9.3 1yr 0.4 (11.5) YTD 0.4 (12.2)
1 yr Forward P/B
10
2011A
2012A
2013A
2014E
2015E
1948 64 2011 579 511 68 149 426 131 294 39 8.4 1.1
2532 64 2595 696 621 75 163 522 161 361 39 10.3 1.1
3038 64 3102 805 722 83 163 623 199 423 39 12.1 1.1
3065 3531 2420 2200 5485 5731 35 35 165 165 (Source: Company/Eastwind)
11
"BUY"
7th Mar' 14
Analysis on recent management interview to media : Dabur expects volume growth at a range of 8-12% for FY15E led by innovation and effective distribution initiatives in chemist channels. If discretionary demand from urban area improves, then volume growth in double digit would not be a surprise for street. A mature segment like Hair Oil remains a concern because of competitive intensity, likely to grow slower than healthcare and home segments. Consistently, Dabur is aggresively working on innovation activities to launch new product as well as product development activities. Recently new launches would come to the people like Vatika Enriched Coconut Oil with hibiscus, Vatika Olive Enriched Hair Oil. Considering its expected expressive volume growth than other peers, aggression on new launches through innovation and aggressive distribution reach energize our positive stance on the stock. Expecting for bottomed up sign on volume growth: Post earning, management of the company expressed hypothetically its view regarding bottoming out of urban demand. The management of other FMCG bellwether like Marico had also stated that the trend of volume decline has bottomed out based on hypothesis. Recent Consumer Confidence Index indicates some upward movement than previous quarters. At a same point, recent softening in CPI and Food Inflation Index (graph on 3rd page of this company's report) hint to improve consumer discretionary demand from rural and urban area. Aggression on expending distribution reach: Dabur is working on chemist channel to drive growth of its health care and Personal care portfolio, and they are planning to distribute personal products through this channel. Dabur had direct coverage of 55,000 chemist stores, which has now increased to 75,000; plans to take it to 125,000 by FY15E. View and Valuation: Despite signs of weak discretionary demand and increased competitive intensity in the market, Dabur India has reported comparatively better volume growth in its key categories. On all operating parameters, its performance was satisfactory. Still, management is cautious for margin ramp up due to high inflation in India. The strong momentum in relatively low competition in the core categories with diversified portfolio, Dabur gets a better place than other peers and its rural distribution expansion should boost sales volumes. We retain our Buy view on the stock with a target price of Rs206. At a CMP of Rs 173 stock trades at 9x FY15E P/BV. Financials Revenue EBITDA PAT EBITDA Margin PAT Margin 3QFY14 1904.28 297.59 243.5 15.6% 12.8% 2QFY14 1748.81 329.24 249.83 18.8% 14.3% (QoQ)-% 8.9 (9.6) (2.5) 220bps 150bps 3QFY13 1635.98 274.51 209.87 16.8% 12.8% Rs, Crore (YoY)-% 16.4 8.4 16.0 120bps 12
P/BV(x)-1year forward
(Source: Company/Eastwind)
Health Supplements
19.5%
Oral Care OTC & Ethicals Digestives Home Care Skin Care Foods International Business
Hajmola Anardana Super Babool + Salt Power 4QFY13 New Ethnic flavour "Kokam" under Real Burrst Fem brand was introduced in Turkey Odoni l Gel
Honitus
Fem with no ammonia Odonil Variants
(Source: Company/Eastwind)
13
Pace of innovation continues Vatika Enriched Olive Hair Oil launched during the quarter
We expect that the volume growth in Hair Oil segment has bottomed out and coming quarter and next spell of growth would come largely from increasing per capita income. Innovation combined with optimum pricing strategy to maintain market share will be key growth driver of this category. How chemist channel would play a role to opportune the gain of market share? Considering the weak consumer sentiment in urban area, there was less opportunity to invest in urban growth in the past 2 years. Now, as green shoots are visible and consumer sentiment is improving, the company is beginning to invest in urban growth with Project COREchemist outlet and range expansion. However, there could be a few quarters of transitory period. As part of this project, Dabur has recruited 350 people in the front end and will incur Rs15cr for the first phase. Project COREs primary focus will be the health care portfolio(Chyawanprash, Honey, Glucose), OTC products (Honitus, Lal Tel) and personal care portfolio which are more relevant to the chemist channel than to general trade. At present, it increased its coverage to 75000 from 55000-chemist store and, plans to take it to 125,000 by FY15E. We expect that project CORE will be favorable to improve margin picture as well as revenue builder.
(Source: Company/Eastwind)
14
International business
For 3QFY14, The International Business (contributes around one third of consolidated sales) grew by 26%. Organic business grew by 29% with 14% constant currency growth rate led by strong performance in GCC, Egypt and Nigeria. The GCC business reported a 21% growth, while sales in Egypt and Nigeria both grew by 16%. Bangladesh remains an important geography for the company, which was impacted by political instability and economic uncertainty resulting in slow growth of 10% YoY. Dabur has organized a strong team and product portfolio for this geography.
Dabur will expand its footprint only in adjacent geographies of its current markets like in Iran, Iraq and Africa. It believes that Bangladesh and Pakistan together have the potential to become Rs500cr market each over the long term.
21% 16% 16% Fem Gold Hair Removal Cream
15
20.9% 33.9% 28.1% 23.9% 14.6% 8.4% 12.9% 16.7% 18.4% 18.1% 14.8% 158.6 86.8 935.4 5.8 10.8 53.5% 14.7 27.5
21.0% 28.1% 13.5% 44.0% 13.0% 7.5% 12.8% 19.6% 19.5% 17.9% 13.9% 96.1 174.1 1391.1 3.3 8.0 40.9% 12.0 29.4
29.3% 11.3% 13.3% 43.0% 12.4% 7.3% 12.9% 18.5% 16.8% 15.9% 12.1% 103.2 174.2 1716.9 3.7 9.9 37.5% 10.5 27.9
16.5% 16.0% 19.6% 39.2% 13.5% 7.6% 13.3% 19.2% 16.7% 16.4% 12.5% 131 174.3 2124.38 4.4 12.19 36.2% 10.75 29.7
(Source: Company/Eastwind)
"BUY"
7th March 2014
We have initiated coverage with Buy rating on the stock with price target of Rs.220 which implies 1 times of FY14E book value. The company has delivered strong performance all around. During quarter, profitability was up by 60% on the back of healthy NII growth and improvement in operating leverage. Return ratio improved from 12% in FY12 to 18% in 3QFY14 which is expected to remain healthy on the back of improving operating leverage and aggressive branch expansion. Healthy NII growth on the back of robust loan growth The companys NII grew by 39% YoY to Rs.40.2 Cr which came from impressive loan growth of 49% YoY. Margin of the company was however declined by 13 bps sequentially on account of higher cost of fund. Yield on loan remained same sequentially which restricted NII growth below than previous quarter (49% YoY). CanFin Home has about 16-17% of exposure in rural area where spread is lower. From last two quarters, yield on loan remained same while cost of borrowing increased by 10 bps which made margin lower sequentially. Loan book continued to be healthy on account of higher non housing loan growth Loan book grew by 49.1% YoY led by strong disbursement in retail segment. The companys exposure to non house loan was about 7% of total loan which grew from Rs.138 cr in 3QFY13 to Rs.400 cr in 3QFY14. The company remains focus on salaried segment which account about 90% of loans. Average ticket size loan is Rs. 16 lakhs. Concentration of individual loan segment declined to 92% of total loan from 94% in March 2013 and this segment shifted towards non housing. Although revenue contribution from this segment is very low but spread is relatively thicker than housing segment. Funding compositions have high credit quality and carried low risk Funding composition of the company continued to be rate MAA+ by ICRA indicating high credit quality and carried low risk. The composition comprises 50% from NHB and 45% from banks, altogether account for 95% of total funding while remaining come from deposits. Average tenure of funding is 7-10 years due to its loan tenure portfolio of 10-15 years. From year FY12 to FY13, source of funding composition saw dramatically changed as share of NHB increased to 50% from previous year of 23% while loan from related party declined to 45% from 70% in FY12. The benefit was also come at effect as blended borrowing cost came down to 9.2% in FY13 from 9.8% in FY12. At the end of 3QFY14, borrowing cost stood at 9.3% from 9.4% in last quarter. Rs, Cr Financials 2010 2011 2012 2013 2014E NII 63 72 84 96 162 Total Income 71 77 91 110 162 PPP 54 60 68 74 114 Net Profit 39 42 44 54 80 EPS 19.1 20.5 21.4 26.4 39.3 (Source: Company/Eastwind) 17 Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
Share Holding Pattern-% Current 4QFY13 3QFY1 3 Promoters 42.4 42.4 42.4 FII 0.6 0.6 0.6 DII 0.5 0.5 0.5 Others 56.5 56.5 56.5 CANFINHOME Vs Nifty
Source:Company/Eastwind
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
18
Source: Eastwind/Company
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
19
Source: Eastwind/Company
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
20
Valuation BaND
Source: Eastwind/Company
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
21
Source: Eastwind/Company
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
22
PROFIT & LOSS ACCOUNT( Rs Cr) Interest Earned Interest Expenses NII Other Income Total Income Operating Expenses PPP Provisions PBT Tax Expenses PAT BALANCE SHEET ITEMS( Rs Cr) Net Worth Borrowings Loans SPREAD ANALYSIS(%) Yield On Advances Cost of Borrowings Spread NIM EFFICENCY RATIO(%) Operating Expenses to Total Income ( CI Ratio) NII to Loan fund Loan to borrowings VALUATION Book Value(Rs) P/B(x) P/E(x)
2010
208 145 63 9 71 17 54 -1 55 16 39
2011
226 154 72 5 77 17 60 1 58 16 42
2012
279 196 84 8 91 23 68 7 61 17 44
2013
379 283 96 14 110 36 74 -1 75 21 54
2014E
586 424 162 0 162 48 114 0 114 34 80
Source: Eastwind/Company
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
23
DB CORP
"Waging war on Print media"
Latest update
CMP Target Price Previous Target Price Upside Change from Previous
"Neutral"
7th March' 14
Neutral
301 340 -
Market Data
BSE Code NSE Symbol 52wk Range H/L Mkt Capital (Rs Crores) Average Daily Volume Nifty 533151 DBCORP 321.50/210
5521 25750
6261.65
The Supreme Court upheld the constitutional validity of the November 11, 2011 Union government notifications, directing implementation of the recommendations of the Majithia Wage Boards for journalists and non-journalists of newspapers and news agencies. This will act as a huge negative for newspaper industry. They have to pay all arrears up to March 2014.It will be paid in four equal installments within one year from November 11, 2011. This would create huge financial burden to a industry already facing problems of rising raw material prices. One the other hand most of newspaper venturing into reginal market in search for better sales volume and margin. This judgment will work as a dampener for newspaper industry as well as DB CORP. Companys EBITDA margin will be effected very negatively not only in FY15E but also next few or more years. Therefore we downgrade DB CORP from `BUY to `NEUTRAL
During the quarter, company has seen 18.2% revenue growth from its advertisement, 14% from circulation and 25% from Radio business on YoY basis. Management expressed its interest regarding inorganic expansion in near future to maintain its healthy growth across all segments.
Management Commentary:
Share Holding Pattern-%
Promoters FII DII Others Current 74.96 17.73 2.95 4.36 2QFY14 74.97 16.46 4.00 4.57 1QFY14 74.98 14.66 5.34 5.02
According to management, Company will maintain a pragmatic approach towards operational controls and higher efficiency. DBCORP will continue to capitalize its consumption potential of Tier 2 and 3 cities. And they are studying on marketing strategies of niche brands in Tier 2 and 3 cities. Company is expected to launch its Bihar edition on 19 Jan, 2014, and we expect to see some part of additional revenue from Bihar edition by 4QFY14E and also expect to see breakeven in 3 to 4 years.
Financials
Revenue EBITDA PAT EBITDA Margin PAT Margin 3QFY14 518.2 153.8 93.57 29.7% 18.1% 2QFY14 438 112.5 63.2 25.7% 14.4% (QoQ)-% 18.3 36.7 48.0 400bps 370bps 3QFY13 438.9 122.8 73.2 28.0% 16.7%
(Source: Company/Eastwind)
DB CORP
Revenue Geography-wise Revenue Segments
Financials;
Rs,cr Sales RM Cost WIP Employee Cost Ad Spend Other expenses Total expenses EBITDA Depreciation and Amortisation Other Income EBIT Interest PBT Tax Exp PAT Growth-% (YoY) Sales EBITDA PAT Expenses on Sales-% RM Cost Employee Cost Ad Spend Event Expenses consumption of store & spare Distribution expenses Other expenses Tax rate Margin-% EBITDA EBIT PAT Valuation: CMP No of Share NW EPS BVPS RoE-% P/BV P/E FY10 1062.1 327.87 -0.0016 131.81 12.98 161.24 720.03 342.07 37.83 11.15 304.24 35.69 279.70 105.72 173.98 10.5% 132.2% 265.4% 30.9% 12.4% 1.2% 1.1% 4.8% 2.1% 15.2% 10.0% 32.2% 28.6% 16.4% 239 18 649 9.6 36 27% 6.7 24.9 FY11 1265.18 383.91 -0.06 184.56 12.52 185.2 862.13 403.05 43.28 14.18 359.77 15.3 358.65 99.97 258.68 19.1% 17.8% 48.7% 30.3% 14.6% 1.0% 1.3% 4.6% 1.7% 14.6% 7.9% 31.9% 28.4% 20.4% 246 18 829 14.1 45 31% 5.4 17.4 FY12 1451.51 508.04 -0.04 242.93 15.04 216.06 1105.03 346.48 50.57 24.02 295.91 9.23 310.7 98.32 212.38 14.7% -14.0% -17.9% 35.0% 16.7% 1.0% 1.0% 5.8% 1.7% 14.9% 6.8% 23.9% 20.4% 14.6% 219 18 927 11.6 51 23% 4.3 18.9 FY13 1592.32 544.54 0.03 279.5 17.21 234.07 1210.25 382.07 58.06 21.34 324.01 7.99 337.36 113.18 224.18 9.7% 10.3% 5.6% 34.2% 17.6% 1.1% 0.8% 6.0% 1.8% 14.7% 7.1% 24.0% 20.3% 14.1% 212.1 18.33 1029 12.2 56 22% 3.8 17.3 FY14E 1861.91 623.74 -1.86 307.21 22.34 260.67 1371.5 490.5 64.5 27.9 426.0 8.0 445.9 156.1 289.8 16.9% 28.4% 29.3% 32.0% 16.6% 1.2% 0.8% 6.0% 1.8% 14.0% 8.4% 26.3% 22.9% 15.6% 301 18.33 1180 15.8 64 25% 4.7 19.0 FY15E 2176.94 740.16 -2.18 380.97 23.95 315.66 1656.7 520.3 75.4 28.3 444.9 5.1 468.1 163.8 304.3 16.9% 6.1% 5.0% 34.3% 17.0% 1.1% 1.0% 6.2% 1.9% 14.5% 7.5% 23.9% 20.4% 14.0% 301 18.33 1344 16.6 73 23% 4.1 18.1
(Source: Company/Eastwind)
25
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the authorized recipient and does not construe to be any investment, legal or taxation advice to you. Narnolia Securities Ltd. (Hereinafter referred as NSL) is not soliciting any action based upon it. This report/message is not for public distribution and has been furnished to you solely for your information and should not be reproduced or redistributed to any other person in any from. The report/message is based upon publicly available information, findings of our research wing East wind & information that we consider reliable, but we do not represent that it is accurate or complete and we do not provide any express or implied warranty of any kind, and also these are subject to change without notice. The recipients of this report should rely on their own investigations, should use their own judgment for taking any investment decisions keeping in mind that past performance is not necessarily a guide to future performance & that the the value of any investment or income are subject to market and other risks. Further it will be safe to assume that NSL and /or its Group or associate Companies, their Directors, affiliates and/or employees may have interests/ positions, financial or otherwise, individually or otherwise in the recommended/mentioned securities/mutual funds/ model funds and other investment products which may be added or disposed including & other mentioned in this report/message.